The rise in mortgage applications is largely due to refinancing. The favorable rates which have been enticing current homeowners will likely be spurred even lower by the latest action of the Fed. This is likely to lure more borrowers into the home buying market.

In conversations I have had recently with buyers, the benefits of home-ownership often out-weigh concerns of a recession. From the perspective of well-positioned buyers-- as they consider the importance of all of their monetary decisions-- home ownership still tops their financial goals. For buyers who plan to stay in their new house at least five to seven years; the combination of good mortgage rates and optimism regarding the future value of Bay Area property makes owning a home a reasonable investment. "Either way we need a roof over our head. Lower interest rates make the monthly payments on a home more affordable," states one home buyer. There are also the intangible benefits of owning your own spot on the planet. You can change anything you want and (if you make your loan payments) no one will ask you to leave. If the recession continues, more may chose beans and rice over caviar; yet, many will also make the leap toward home ownership.